4 ms·
This is a curious expectation, but it feels right to me (with a degree in economics). Recessions are usually preceded by inflation, not followed, However, wars
by russell 16y ago
This is a curious expectation, but it feels right to me (with a degree in economics). Recessions are usually preceded by inflation, not followed, However, wars are usually followed by inflation. Since 1960 inflation has been over 600%, energy about 850%. My expectation, is that a huge amount of money has been pumped in to the economy to pay for the wars and the bail-outs. The money is being absorbed by the wars and the trade deficits. I think the current situation is unstable and it will blow up, perhaps in 2012. Certainly any austerity program that hits the middle class hard, and all the Rep. proposals do, will trigger political thrashing and immense hardship, something approaching the severity of the Depression, or we will get the typical end of war inflation.
- RobGR 16y agoI agree with you, but I think your terminology is inexact when you say: "The money is being absorbed by the wars and the trade deficits." Wars do not absorb money, they absorb wealth -- money is paid to make a bullet, and after the bullet is shot the money remains to decrease the value of all money, and the bullet is gone. Trade deficits can move accumulated wealth (or money) around, but they also don't absorb it; a foreign country might absorb money, if they decide to stockpile it.
- russell 16y agoIt felt awkward when I wrote it. You are right. The wealth is absorbed/destroyed, but the money is still there with fewer goods to purchase, hence inflation (eventually).